The 6 Aerospace Industry Trends You Need to Know Right Now

It should go without saying that if you work in aerospace and defense marketing, you must be a demonstrated expert in the discipline of marketing. But industry expertise is just as important. Staying up-to-date with news, and having the ability to recognize and interpret trends, is a skill worth cultivating.

Why Marketers Need Context

Beware of the Bathwater

Most of us have heard the term “drinking your own bathwater,” and it is rampant in our industry. Unfortunately, this is what happens when we are too narrowly focused on ourselves — our products, our business, our segments — at the expense of external context and understanding.

This inward focus, or drinking your own bathwater, is fatal for professional marketers. Do you really have the best customer service? Are you sure that new competitor isn’t a threat? And do you know for a fact that a new technology or regulation won’t make your product obsolete? We need to be highly attuned to the world around us so our marketing and business decisions can address these external realities and not our internal narratives.

Expertise results from both knowledge and understanding. It’s one thing to know a lot of stuff. It’s another to know what that stuff means to your business and your marketing efforts. That only comes from experience, coupled with an ability to see the big picture and connect the dots.

For example, let’s say your business is a supplier to Boeing in support of commercial jet production. Knowing that Chinese customers make up one-third of Boeing’s base in this segment is important—and keeping a close watch on U.S. relations with China is essential. As one editor explained in a recent Aviation Week Intelligence Network webinar, Boeing can’t afford for the U.S. to get in a spat with China. And if you are a Boeing supplier, neither can you.

What to Watch Now

So, with the first quarter of 2017 behind us, what are some of the high-level aerospace and defense industry trends worth watching?

1. Oil prices are rising.

That’s good for helicopter people and not so good for business aviation, general aviation, airlines, OEMs and their suppliers. Barrons reports that analysts are predicting an average crude price of $55 a barrel, up from a low of about $30 and down from a high of nearly $150. Are you watching oil prices, and do you know what they mean for your business?

2. More defense spending.

A Trump presidency and rising global tensions will boost defense spending, both domestically and internationally. In fact, the president’s proposed budget calls for a $54 billion increase in U.S. military spending. Now, expecting more money is one thing — knowing where it will be spent is another — and this is what we should be watching. The big winners could include Navy ships, F-35s, F/A18s, modernizing Apaches and Blackhawks, tactical missiles, and unmanned aircraft. Smart marketers should be preparing their businesses to capitalize on these realities and adjusting as needed.

3. The ‘Buy American’ initiative is happening.

The “America First” philosophy is more than a campaign promise. The Trump administration is taking decisive action. But what does it mean to us? Defense News recently reported that the Pentagon’s largest acquisition program, the F-35, relies heavily on an international supply base. What will this domestic focus mean to the thousands of businesses supporting the F-35, especially since this is a priority program? If your company outsources work to other nations, or if you count on a global supplier base, this issue should be on your radar. Are you prepared for any possible fallout and negative publicity? Alternatively, is all of your business done in the U.S.? How can you — or should you — leverage your domestic focus?

4. Much international uncertainty.

If “Buy American” turns off international buyers, things are going to get interesting. Exports are remarkably important to the U.S. Aerospace and Defense industry (these Aerospace Industry Association statistics are mind-blowing). In fact, exports have grown by 52% over the past five years, and if international sales are important to your business, there is a lot to know. The Export-Import (Ex-Im) Bank policy is especially important because, as the nation’s export credit agency, Ex-Im is a valuable tool for aerospace businesses. Once opposed to the bank, President Trump recently changed his position. It’s definitely something to watch, as is export control reform.

5. Innovation is back.

While the industry has always talked about innovation, we haven’t always acted accordingly. Today we are experiencing an aerospace innovation renaissance that is driven by both OEMs and private ventures, like SpaceX. Supersonic aircraft, flying cars, unmanned aerial systems, and anything related enabling connectivity and data are hot. While the government is spending less on innovation, leading aerospace firms are investing more. Be careful, because innovation can mean risk, but it’s important to consider how your business can capitalize on these markets and trends.

6. The aftermarket is hot.

Military operators are flying aging fleets longer, and OEMs are tripping over one another to get their share. Late last week, MRO-Network.com quoted a Wall Street analyst as saying that OEM interest and involvement in the commercial aerospace aftermarket represents “a structural shift in their approach to the commercial aftermarket.” If this is your business, you can expect more opportunities, competition, and price pressure.

Ideas and Resources

While you don’t want to limit yourself to just one source of information, it’s easy to get overwhelmed. So choose wisely.

The best industry associations share news, policy information, and data. Start with the Aerospace Industries Association, and find out what your market-specific organizations have to offer.

Follow your customers, competitors, prospects, and favorite journalists on social media, including Facebook, Instagram, LinkedIn, and Twitter. In fact, it may surprise you to learn that there is a strong aerospace industry presence on Instagram.

Understanding the industry is a full-time endeavor for consultants and analysts like the Teal Group’s Richard Aboulafia. Consider whether his monthly newsletter should be on your must-read list.

It may sound like a lot of work, but adding breadth and depth to your aerospace and defense industry knowledge is an investment in you. It will make you a better marketer, a more valuable and trusted member of your current organization, and a more attractive candidate for future opportunities.